Insurers' New Infrastructure Investment Rules

Summary#

This is a proposed set of rules called the Regulations for Permitted Infrastructure Investments, published on February 11, 2023, that would let federally regulated life insurers and related companies make long‑term equity investments in certain public infrastructure businesses. The rules are a follow‑up to changes in the Insurance Companies Act and are still a proposal — there is a public comment period of 30 days (so it is not law yet).

What it does#

• Defines a new kind of company called a "permitted infrastructure entity" (PIE) and lists the types of physical infrastructure that count. The list covers 10 broad categories, for example airports and rail, water treatment, power plants and transmission, hospitals and senior housing, data centres and telecommunications, and roads and bridges.
• Sets the business activities a PIE may do (examples: operate an asset, hold related real estate, own shares in other PIEs, or design/build an asset that the PIE will own or operate).
• Requires that a PIE or the specific infrastructure asset must “involve” a public body when an insurer first invests. “Involve” can mean roles such as owning at least 10% of the asset, buying most of its output, leasing it, guaranteeing its revenues, setting user prices, or defining access rights.
• Allows insurers to keep investments even if the public‑body involvement later ends — provided the same assets remain part of the PIE’s business; if the PIE takes on a new asset, public involvement must again be present at that time.
• Requires that one purpose of the investment be to match the insurer’s assets with its long‑term liabilities (asset‑liability matching).
• Caps how much any insurer can have tied up in PIEs at 20% of its regulatory capital. That cap counts equity holdings, loans to PIEs, and guarantees given for PIEs.
• Keeps supervision with the Office of the Superintendent of Financial Institutions (OSFI); the rules are designed to let insurers invest long‑term while keeping solvency safeguards.

Who's affected#

• Federally regulated life insurance companies, fraternal benefit societies, and insurance holding companies (the life and health insurance entities) would be able to use this new permission.
• Policyholders of those insurers could be affected indirectly, because the change alters how insurers invest their assets for long‑term products (like annuities).
• Governments and public agencies that run or contract public infrastructure projects could see another source of private capital.
• Provincial or provincially regulated insurers are not covered by these federal regulations; the proposal applies to federally regulated entities only.
• The Department of Finance and OSFI (mentioned here because they wrote and will supervise the rules) are involved in implementation and oversight.

Why it matters#

• It gives insurers a clearer, long‑term route to invest equity in revenue‑generating public infrastructure. Those assets tend to be long‑dated and relatively predictable, which helps insurers match the timing and size of future claims (asset‑liability management).
• By allowing sustained insurer ownership of infrastructure, the rules could channel more private institutional capital into projects such as transit, hospitals, broadband, and energy — potentially helping address Canada's infrastructure needs.
• The proposal builds in safeguards (public‑body involvement rules and the 20% exposure cap) to reduce risks to insurers’ solvency and to ensure investments are truly public‑service assets rather than purely private commercial activity.
• The Department’s analysis says it does not expect additional costs to insurers or the government from these rules, but the measure is still a proposal and could change after public comment.